Crypto lobbying orgs ask court to suspend Illinois tax as legal case continues

The Crypto Council for Innovation and Blockchain Association continued their legal fight against Illinois new crypto tax, asking a state court on Wednesday to block it before it takes effect as the industry's effort to kill the tax continues through the court system.

The two lobbying organizations first filed to block the tax last month, joining The Digital Chamber in arguing that federal law preempted the Digital Asset Tax Law enacted earlier this year. The 0.2% tax adopted on the last day of Illinois' legislative session would apply to any entities based in Illinois or that provide services in the state with gross receipts worth over $100,000, and will take effect on Jan. 1, 2027.

Wednesday's filing asks the Sangamon County Circuit Court to enact a preliminary injunction, suggesting that the two groups' member companies are already suffering "serious and irreparable harm" due to having to build systems to comply with the law.

In a statement, CCI CEO Ji Hun Kim said "companies are being asked to spend millions to build systems for a tax that violates their Constitutional rights without answers to basic questions about what is taxed and when."

Blockchain Association CEO Summer Mersinger similarly said in a statement that Illinois would not be able to use any of the funds it is projected to raise during the litigation, so "the State loses very little by waiting. Everyone else loses a great deal by forging ahead."

Much of Wednesday's filing reiterates arguments that the crypto industry has already brought: That the Internet Tax Freedom Act and the U.S. Constitution both preempt Illinois' state tax on digital asset transactions. It also argued that the state would be treating digital assets differently from other financial services.

"Illinois generally does not tax transactions or services involving financial assets, beyond taxing income and capital gains associated with those transactions or services, and sales in which financial assets (such as money) are used as a method of payment," the filing said. "The State’s sales and use taxes do not otherwise reach activities involving intangible personal property, including most financial assets, and those laws expressly exempt money and precious metals."

Mersinger also hinted that other states might try to copy Illinois if the state wins its case: "If this Act stands, Illinois will not be the last state to try it."